Las Malvinas, las Listas Negras y el Doble Estándar

By Alvaro Tomas

August 2015

It turns out Argentina vehemently opposed Panama’s advance to the second phase of the OECD’s Global Forum, and, despite great efforts made by the private sector and the government to pass a package of laws that would emphasized the commitment of our country to the transparency demanded by the modern world, we will remain in the gray list for the time being. As a member of the group called G-20, another powerful forum created by OECD countries, Argentina had the necessary weight to affect Panama. Remember that we are currently engaged with the Argentines in a lawsuit before the WTO, which to our understanding we won, since Cristina Kirchner’s government broke rules by discriminating against Panamanian imports of goods and services. This was, for sure, a payback. I just changed my personal position on who the righteous owner of The Malvinas is.  Hey… The Falklands are British.

The double standard of the United States and its European acolytes, members of this elite club called the OECD, never ceases to amaze me. An article published in the Guardian on August 11^th of this year by Juliette Garside and entitled Google’s Alphabet restructure could get boost from Delaware tax loophole, clearly outlines the tax benefits given to multinational companies such as Google by being established as Delaware corporations. More than 1 million companies are registered to the address 2711 Centerville Road Wilmington, Delaware. Giant companies like Google, Toys R Us and Kmart have decided to settle in this state for one reason: the tax advantage it brings to its coffers.  It is as simple as that.

Delaware’s tax code, among other tax advantages, in section 1902 (b) (8) exempts any taxes on companies whose activities are intended “to the maintenance and management of their intangible investments … and the collection and distribution of income resulting from use of these intangibles or tangible property located outside this state”.  The reporter notes: “Essentially, companies without operations in Delaware do not pay taxes there.” My question is: how is that different from Panama? Why is it easy and acceptable for companies that do not operate in Delaware to establish there in order to pay less taxes, but the same is not acceptable in Panama? Where are Gurria and Saint-Amans from the OECD? My grandmother said, “He who pays the band rules the party” and saying anything to the Americans would be unacceptable because it would end their lavish lifestyles of bureaucrats riding limousines, Hermes ties, fine restaurants and air-conditioned offices.

How does this mechanism called the “Delaware Loophole” work? Simply the Delaware company becomes the owner of the intellectual property of its entire group and the subsidiaries have to pay royalties that are not taxed in Delaware and are considered deductible expenses for said subsidiaries. This is called providing a competitive advantage to attract investment and jobs to Delaware. Why is it that Panama is not allowed to do this, but a state with 900 thousand inhabitants in the United States is?